tiï O Q,
Chief Executive's Statement
Introductio^^^^^^^^^^H Report of the Executive Board^^^^^l Report of the Supervisory Board
In 2018, we delivered another year of strong
top line growth. The Heineken® brand grew
7.7%, its best performance in a decade.
Our new brand extension, Heineken® 0.0 has
been very well received and is now available in
38 markets worldwide.
The rest of our premium portfolio also grew
double digit, led by our international beer brands
such as Tiger, Desperados, Birra Moretti and
Krusovice, craft and variety beers, and ciders.
In the UK and South Africa, Strongbow flavour
variants drove our cider sales growth. We also
strongly developed outside traditional markets.
In Vietnam, we are establishing the cider category
with Strongbow while in Spain our recently
introduced Ladrón de Manzanas is off to a
promising start.
Craft and variety beers like the low alcohol variant
of Affligem and Birra Moretti Regionale performed
very strongly. Meanwhile, Lagunitas outperformed
the craft segment in the US and continued its
international expansion. Originally brewed in
Petaluma and Chicago, Lagunitas is now also
brewed in the Netherlands in our craft brewery
in Wijlre.
In addition to Heineken® 0.0, we introduced
innovations in our low- and no-alcohol portfolio
which reached 13.1 million hectolitres. In Ethiopia
we introduced Sofi Buna, a dark malt drink with
local coffee, while worldwide, our Radler portfolio
continued to expand.
All regions contributed to our strong performance.
Brazil deserves a special mention for strong growth
following the integration of our two businesses.
An important milestone for the year was the
announcement of our strategic partnership with
CRE in China, the largest beer market in the world,
where Heineken® has strong brand equity and
where CRE is market leader by volume.
The first time consolidation of our Brazil
business, rising input costs and adverse currency
developments slightly impacted our operating
profit margin.
We have progressed with our Brewing a Better
World commitments. Already at the end of 2017
we surpassed our 2020 carbon emissions targets.
In 2018 emissions further reduced to 5.5 kg
CO2 equivalent per hectolitre, which represents
a 47% decrease since 2008. In February 2018,
we announced our new Drop the C programme.
Our ambition is that 70% of all our electric and
thermal energy needs in production will be covered
by renewable sources by 2030. During the year, we
embarked on the first 13 renewable projects of this
programme. Today, 15% of our electric and thermal
energy sources are renewable.
Heineken N.V. Annual Report 2018Ï 0
Financial Statements Sustainability Review Other Information
Because we have also already reached our
2020 water commitments, later this year we will
announce Every Drop, our 2030 water vision.
Our average water consumption at the end of
2018 was 3.5 hectolitres of water per hectolitre of
beer, a reduction of 32% compared to 2008 and
3.2 hectolitres of water per hectolitre of beer for
water-stressed areas. At the end of 2018, 96% of
our eff uents were treated worldwide.
In 2018, our 'When You Drive, Never Drink'
campaigns continued to receive significant
exposure through the Formula 1™ partnership.
In 69 markets around the world, we dedicated at
least 10% of Heineken® media spend to Responsible
Drinking campaigns.
We regularly review our codes and policies and in
2018 we refreshed the Code of Business Conduct,
including our Human Rights Policy and Responsible
Marketing Code. The Code and underlying policies
were rolled-out in all operating companies and in 38
languages. Since 2016, we have worked with human
rights experts Shift to identify and address human
rights-related risks in our operations in line with UN
Guiding Principles on Business and Human Rights.
In 2018, we also renewed our Brand Promoters
Policy. We implemented this policy between June
and December, incorporating the feedback and
recommendations made by brand promoters,
NGOs and three independent assessors.
Looking ahead to 2019, we will continue to strive
for superior top-line growth driven by volume
growth, price increases and premiumisation.
We expect volatility in economic conditions will
continue and plan to partially mitigate input
and logistics cost increases through productivity
measures and prudent spend. Consequently,
excluding any major unforeseen macro-economic
and political developments, we now expect
operating profit (beia) to grow by mid-single digit
on an organic basis.
Our strategic priority is biased towards growth.
This can only be achieved through continued focus
on innovation, operational excellence and social
and environmental sustainability, so consumers
can enjoy our brands, our customers' expectations
are exceeded and we continue to enjoy the trust
of the communities in which we operate.
Already in full speed in 2019, I want to express
my gratitude to my colleagues, customers and
suppliers for a great 2018.
Jean-Francois van Boxmeer
Chairman of the Executive Board and CEO
Amsterdam, 12 February 2019